MESA LABORATORIES INC CO

Division Performance

Sterilization and Disinfection Control (38% of revenues in 2Q25) revenues were $22,205 for the quarter which resulted in core organic revenues decline of 5.2% versus prior year. The acquisition of GKE drove overall quarterly growth to 30.0%. Orders, excluding GKE, increased 6% for the first six months of the fiscal year with delivery timing negatively impacting revenues for 2Q25 and, we anticipate, positively impacting 3Q25. Gross profit percentage for the quarter contracted by 470 bps versus the prior year primarily due to the impact of non-cash inventory step-up purchase accounting charges from GKE and the amortization of GKE’s intangible assets. Absent the impact of these non-cash purchase accounting charges, gross profit percentage would have contracted by 210 bps, driven primarily by volume declines and increased costs in the legacy business. Beginning in the third quarter of fiscal year 2025, the inventory step up will unwind and we expect GKE's gross profit percentage to be in the low 70s, in line with the rest of the division.

Calibration Solutions (21% of revenues in 2Q25) revenues were $12,262 which resulted in core organic revenues growth of 8.2% for the quarter. Year over year growth was driven primarily by commercial momentum, particularly in our renal care product lines which we expect to continue in the near term. Gross profit percentage expanded by 220 bps primarily due to increased revenues, pricing, and favorable product mix.

Biopharmaceutical Development (21% of revenues in 2Q25) revenues were $11,867 which resulted in core organic revenues growth of 27.9% for the quarter. The increase in revenues was driven by increased biopharmaceutical spending on capital equipment in North America and Europe which when combined, resulted in an 109% increase in revenues from hardware and software versus the same quarter prior year. Gross profit percentage expanded by 60 bps primarily due to increased revenues as well as favorable product mix.

Clinical Genomics(20% of revenues in 2Q25) revenues were $11,499 for the quarter, which resulted in a core organic revenues decline of 26.5% for the quarter but an increase of 0.8% sequentially compared to 1Q25. The year over year decrease in revenues was driven primarily by headwinds in China and North America as described above. Sequential growth for the second consecutive quarter and improving sales funnels have us optimistic that the turnaround plan is gaining traction. Gross profit percentage expanded by 170 bps due to decreased amortization as a result of impairment charges taken during 4Q24.